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Pinellas County, Fla., Solicitation Ordinance Violates Law, Nonprofit Organizations Say in Lawsuit

May 16, 2001

Pinellas County, Fla., Solicitation Ordinance Violates Law,
Nonprofit Organizations Say in Lawsuit

Public Citizen, Greenpeace and Others Sue County Contending Ordinance Covering Charitable Organizations Violates First Amendment

WASHINGTON, D.C. — A Pinellas County, Fla., ordinance requiring charitable organizations to register with the county before soliciting donations from residents is unduly burdensome and violates the First Amendment and the Commerce Clause, according to a lawsuit filed today in federal court in Tampa. a lawsuit filed today in federal court in Tampa.

Not only does the law require charitable organizations to provide highly detailed, burdensome and invasive information as a condition of obtaining and keeping a license to solicit contributions from Pinellas County residents, but it even gives the county discretion to deny groups the right to solicit donations based on a review of the wording of solicitation letters—a form of censorship, the suit says. The law also requires nonprofits to register with the county simply because they receive an unsolicited contribution via the Internet, thereby sweeping within its reach charitable groups worldwide that have no connection whatsoever with the county.

The suit was filed against Pinellas County, Fla., by Public Citizen, Greenpeace, American Charities for Reasonable Fundraising Regulation, and the Nonprofit Federation, a division of the Direct Marketing Association that represents hundreds of nonprofit groups. The groups filed the suit in the U.S. District Court for the Middle District of Florida.

“These types of licensing and reporting requirements impose tremendous and unnecessary costs on groups like ours, both to collect the information and to put it into the specific place on the individual form for each jurisdiction where we are supposed to register and report,” said Joseph A. Zillo, Public Citizen’s chief operating officer. “We already fully report to the IRS in a very detailed Form 990, which is available on our Web site and will be sent to anyone who asks for one. The information on the 990 is more than any contributor could reasonably want to know, and we cannot fathom why states and localities would think they need anything more. Even so, we have registered with and supplied extensive information to dozens of states across the country, including Florida. To expect charities to register in and report to thousands of local governments nationwide on top of that is just too much. We cannot do it.”

Although the Pinellas County ordinance went into effect in 1993, the county has grown increasingly aggressive in recent years in attempting to enforce it, sending letters to charities across the country threatening sanctions if they do not register and pay the requisite filing fee. Several aspects of the ordinance are particularly burdensome and invasive, far exceeding what other jurisdictions and the IRS require.

For example, the ordinance and permit application form require the charity to state whether any of its directors, officers or employees are related to any other director, officer, owner or employee of the organization or to that of any of the group’s vendors or suppliers. Similarly, the law requires disclosure of whether any director, manager, or specified official have ever been employed by or a member of another organization registered in Pinellas County. Such requirements would force charities to take the unusual step of investigating not only the employment and professional histories of its various directors, officers and employees, but also the relationships among its employees, consultants, mail houses, office supply stores and other entities with whom the groups contract. Also troubling for many charities is the ordinance’s requirement that charitable groups turn over for the county’s review copies of written solicitations and phone scripts, opening the groups up to potential censorship by the county.

The law requires detailed information about each solicitation, including the contemplated receipts and expenses of the solicitation, the proportion of contributions that will go to the object of the solicitation, and the distribution plan for the contributions—information that can be difficult to compile and that changes frequently. The ordinance imposes detailed financial reporting requirements, demanding reporting of such information as expected gross revenue, contributions and fundraising expenses, anticipated management and general expenses. As Zillo said, “We do not even keep our books at the level of specificity or in the categories demanded by the Pinellas County ordinance. We would have to hire a new staff and overhaul our accounting system to be able to report the kind of financial information the ordinance requires — neither of which we are able or willing to do.”

Moreover, changes in information on a registration form, as occasioned by the appointment of a new officer or director, the hiring of a relative by an entity with which the charity contracts or the development of new solicitation materials, must be updated for the county within 15 days.

The complaint sets forth several legal bases for the challenges. The plaintiffs rely on the First Amendment — which the Supreme Court has held protects charitable solicitations — in asking the court to strike down both the registration and reporting requirements. The groups also rely on the Commerce Clause in contending that the reporting requirements are unreasonably burdensome and therefore interfere with interstate commerce. With respect to the county’s attempt to regulate the Internet, the groups cite not only the First Amendment and the Commerce Clause, but the Due Process Clause of the Fourteenth Amendment, which governs whether the county has jurisdiction to regulate charities’ use of the Internet.

Pinellas County and the state of Florida are not alone in seeking to regulate charitable solicitations. Thirty-eight states and the District of Columbia require charitable organizations to register if they intend to solicit. The nature of what must be reported varies widely, forcing charities to struggle to keep up with mounting registration fees and staggering piles of paperwork.

“One of the reasons that we are filing this lawsuit,” Zillo said, “is that as cities and counties have begun to impose greater and more disparate reporting requirements on charities, the effort to comply with the numerous competing sets of registration and reporting requirements has become increasingly onerous, costly, time-consuming and difficult. We believe it is time to take steps to stop this trend before it truly overwhelms us.”